Generally, individuals cannot get approved for prime lending through a traditional bank because of a bad credit score or lack of employment history. Particularly after the subprime mortgage crisis in America, it has become increasingly difficult for people with even modest credit scores to get approved for a mortgage. That’s leaving millions of people having to seek alternative lenders in order to get the cash needed to buy a home.

What you need to know about subprime mortgage lenders is that their fees and terms are not particularly favorable. Because they are assuming more risk by lending to someone who demonstrates poor creditworthiness, you can expect to pay significantly more in interest on your loan. In addition, they may require larger down payments, which reduces their risk in home abandonment since you’ll have a greater equitable interest in making payments on time to keep your home.

In addition to higher interest rates and bigger down payments, be sure to clearly understand all other terms of a mortgage loan through a subprime lender. There may be additional fees, early repayment penalties, and higher than average late payment fees. Before putting ink on any mortgage contract, be sure to compare rates and offers and not to get too caught up in their offer.

While subprime lenders have made it possible for millions of people to purchase a home, that doesn’t necessarily make it the best option. Never buy more than you can afford, and be sure to do your due diligence when considering various offers. Realize too that subprime mortgage lenders don’t typically identify themselves as such, but if you are repeatedly denied from a traditional bank, than chances are that is what you are dealing with.

The scenario is unfortunately common: people have lost their jobs or are suffering as a result of the recession. They’ve exhausted their options, have done everything possible to get a higher paying job in an incredibly competitive job market, and they’re not sure what to do next. The question may be, should you tap into your retirement accounts to pay the bills, or is it better to get behind in payments and ruin your credit.

According to Jack Guttentag, there is no right answer, but often times it’s a matter of missing your payments this money and facing the inevitable, or missing your payments next month. The question may also be a moral dilemma since, as a borrower, you are obligated to make the payments. But if you can miss your payments this month and keep your money to help you get out of a rut, that may be the better long-term strategy.

Of course there are implications to doing this, since it can hurt your credit score if your lender decides to report your late payments to the credit bureaus. However, by delaying your payments you could be buying yourself time to find a higher paying job.

Another alternative for those who are facing financial hardship and don’t have enough money to make their payments, is to see if you qualify for a loan modification. This is the process of re-negotiating your existing mortgage with your bank in order to make your payments more manageable. If accepted, it is important to consider the tax implications that can come with a home loan mortgage modification, and is something you should discuss with a certified financial advisor.